Mobile & Internet

[Herald Interview] A potential new unicorn: Sandbox Network

PUBLISHED :February 10, 2019 - 13:52

UPDATED :February 10, 2019 - 15:36

Korea’s YouTuber management company Sandbox Network, cited as one of the most popular workplaces among Generation Z, has hit countless milestones. This year, it has a new goal: to become a unicorn -- startups with a valuation of over US$1 billion.

Sandbox Network CEO Lee Pil-sung said that Sandbox would go public around 2021, emphasizing that being listed implies that a company has the capability to achieve sustainable growth.

Sandbox Network CEO Lee Pil-sungSandbox Network

To hit these goals, Sandbox Network is aiming to stabilize its business by generating revenue of 50 billion won (US$44.23 million) this year, with an operating loss rate of around 5 percent. Last year, sales stood at 28 billion won, while its operating loss rate was 10 percent.

“For now, we see that it is more important to inject money for setting the basis for growth, rather than quickly reaching break-even point,” said Lee.

For further synergies and steady growth, the company has been diversifying its business portfolio. In 2018, it launched esports club Sandbox Gaming, which manages esports players. Lee said he hopes to generate synergies with the esports business by creating contents about the players.

“Making Sandbox Gaming a champion is the first and crucial goal as a club operator. We also believe the team’s story and the players’ interaction with fans are important in making it more appealing,” he said.

Another profit avenue from Sandbox Gaming will be goods marketing.

“I saw the potential after seeing Chinese fans snap up SK Telecom T1’s goods. Foreigners may not be familiar with SK Group, the operator of SK Telecom, but they still know the esports team.”

Lee also aims to expand the company overseas business by supporting contents in areas that are not limited by language, such as beauty and fashion. This is because he believes its game contents cannot compete overseas, due to the focus on “small talk,” which is based on local culture and language.

“We can’t compete because overseas operators will always have the upper hand,” he noted, stressing that despite limitations, the entertainment business is full of potential.

“From the beginning we aimed to do business in all fields of entertainment. We started with games because that was what we were good at.”

Lee also laid out plans to cooperate with more platform operators like Netflix and Oksusu. Sandbox Network mainly sells content to online video platform operators such as YouTube, Twitch, Afreeca, Naver and Kakao.

“OTT platform operators are currently getting their contents mainly from broadcasting giants instead of companies like us. But I am sure that demand from young viewers (on OTT platforms) will increase.” Lee said. “In the meantime, we are improving our content quality, so when the time comes we can meet those demands.”

In 2014, Lee co-founded Sandbox Network with Na Hee-sun, who is also the company’s chief creative officer and the identity behind popular YouTube channel Dotty, with over 2.2 million subscribers.

“I was working for Google Korea when my friend from university Na started his own channel on YouTube. Then in 2014, he seemed to be looking to create a company to properly support content creators,” Lee said.

He agreed to co-found Sandbox Network because he saw there was the potential to expand, as the environment was flourishing. He also found a good partner in Na.

“There are many business areas we could grow in, such as creator management, content producing and creating advertisements. Also, more people are watching videos on their phones. I was also hooked because Na and I had professional knowledge, just in different areas,” he said. “Seeing these factors, I got the courage to start the business, although there were uncertainties.”

But things weren’t so easy. From the beginning, the two founders had slightly different visions for the firm. Lee wanted to focus on improving finances, while Na put emphasis on providing support for content creators.

“We did have different opinions, but we never fought over anything,” he said.

“We spent some time to discuss and persuade each other. Through the process, I came to understand and believe that injecting money for quality contents is not a loss. And Na also understands more about the company’s management and limited assets now.”